Publication: Russian Federation Financial Sector Assessment Program: Insurance Sector Technical Note
Loading...
Published
2016-07
ISSN
Date
2016-09-13
Author(s)
Editor(s)
Abstract
This technical note covers the insurance sector supervised by the CBR. The analysis was carried out as part of the 2016 Financial Sector Assessment Program (FSAP) of the Russian Federation, and was based on the regulatory framework, supervisory practices and other conditions as they existed in March 2016. Relevant information including laws, by-laws and regulations as well as responses to a questionnaire sent out in advance were provided by the Central Bank of Russia (CBR) before and during the mission. The assessment has been supported by discussions with the CBR and the insurance market participants. the Russian insurance industry ranked 27th in the world. Non-life insurance premium accounted for 89 percent of GPW while life insurance for only 11 percent. Another factor that further undermined the profitability of the insurance industry in 2013-2015 has been the raising claims inflation in the MTPL segment of the market. In 2015, the industry also faced with the consequences of the Western economic sanctions which effectively closed access to the high quality Western reinsurance capacity for the Russian insurers that provide coverage for 1500 large Russian companies that were put on the sanctions list. In the past, the Western reinsurers provided over 80 percent of reinsurance capacity for such risks. The further consolidation of the sector will lead to a better performing insurance market.In the case of Russia, the main objective of insurance supervision is to ensure that insurers fully comply with core regulatory norms fixed by the law in the following four areas of insurance operations: (a) solvency (capital adequacy); (b) insurance reserves; (c) assets covering own funds; and (d) assets covering reserves. The most profound implications of the current rule-based insurance supervision is a likely underestimation of the sector’s solvency. While the dispersion of insurance supervisory functions among numerous CBR departments with various reporting lines carries certain advantages (such as a reduced potential for the conflict of interest), it also has a potential for major drawbacks.
Link to Data Set
Citation
“World Bank; International Monetary Fund. 2016. Russian Federation Financial Sector Assessment Program: Insurance Sector Technical Note. © World Bank. http://hdl.handle.net/10986/25065 License: CC BY 3.0 IGO.”
Digital Object Identifier
Associated URLs
Associated content
Other publications in this report series
Journal
Journal Volume
Journal Issue
Collections
Related items
Showing items related by metadata.
Publication Russian Federation Financial Sector Assessment Program(World Bank, Washington, DC, 2016-07)With about RUB 988bn (USD 26bn) in gross premium written, in 2014, the Russian insurance industry ranked 27th in the world. Non-life insurance premium accounted for 89 percent of GPW while life insurance for only 11 percent. In 2015, the industry also faced with the consequences of the Western economic sanctions which effectively closed access to the high quality Western reinsurance capacity for the Russian insurers that provide coverage for 1500 large Russian companies which were put on the sanctions list. In the past, the Western reinsurers provided over 80 percent of reinsurance capacity for such risks. In the case of Russia, the main objective of insurance supervision is to ensure that insurers fully comply with core regulatory norms fixed by the law in the following four areas of insurance operations: (a) solvency (capital adequacy); (b) insurance reserves; (c) assets covering own funds; and (d) assets covering reserves. The objective of off-site and onsite supervision is restricted to ensuring compliance of insurers with these four regulatory norms. In this context, the resources of the insurance supervisor are by and large dedicated towards meeting this objective. While the dispersion of insurance supervisory functions among numerous CBR departments with various reporting lines carries certain advantages (such as a reduced potential for the conflict of interest), it also has a potential for major drawbacks. These include the potential for (a) insufficient coordination among different departments, (b) shortage of necessary insurance expertise within departments universally dealing with a wide range of financial services, and (c) impaired ability of the regulator as a whole to systematically detect problems with compliance in such a technically complex industry as insurance at an early stage.Publication Financial Sector Assessment Program Update - Albania : Insurance Core Principles(World Bank, Washington, DC, 2014-02)This assessment of Albania's compliance with the International Association of Insurance Supervisors (IAIS) Insurance Core Principles (ICP) was carried out as part of the 2013 Financial Sector Assessment Program (FSAP). Although this is the second FSAP for Albania, this is the first external assessment of Albania's compliance with the ICPs. The Albanian Financial Supervisory Authority (AFSA) has all the responsibility for insurance regulation and supervision in Albania. This assessment is based upon information made available to the assessor in preparation for and during the November 2013 FSAP mission. The AFSA contributed its self-assessment and a detailed update thereof at the individual criterion level. Further sectoral information (including responses to a questionnaire sent out in advance) was provided before and during the mission. Comprehensive documentation, including all relevant laws, by-laws and regulations were: (i) available on the AFSA's web-site; or (ii) provided to the assessor by the AFSA's management.Publication Financial Sector Assessment Program - Albania : Core Principles for Effective Deposit Insurance Systems(World Bank, Washington, DC, 2014-02)This assessment of compliance with the core principles for effective deposit insurance systems (core principles) was conducted as a part of the Financial Sector Assessment Program (FSAP) performed by the International Monetary Fund and the World Bank at the request of the Albanian government. This assessment was conducted by Claire McGuire, Senior Financial Sector Specialist with the World Bank, during a mission to Albania from October 28th to November 11th, 2013. The assessment was based on a review of relevant laws, regulations and regulatory and supervisory practices related to the banking sector and the operations of ADIA. Multiple meetings were held with various employees of the Bank of Albania (BOA), Ministry of Finance (MOF), the Banker's Association, the two savings and credit associations, and ADIA. ADIA completed a self-assessment in preparation for the FSAP.Publication People's Republic of China Financial Sector Assessment Program(World Bank, Washington, DC, 2012-03)Insurance companies in China are closely supervised and generally subjected to appropriate regulation. The China Insurance Regulatory Commission (CIRC) employs a rules based framework and has achieved a high level of regulatory compliance from supervised companies. This assessment of the People's Republic of China's compliance with International Association of Insurance Supervisors (IAIS) Insurance Core Principles (ICP) was carried out as part of the 2010 Financial Sector Assessment Program (FSAP). The CIRC has principal responsibility over insurance regulation in China and conducts its duties through its headquarters in Beijing and 35 regional branches, the insurance bureaus. Insurance supervision is not limited to the CIRC, as it is affected by high level regulations issued by the state council.Publication Financial Sector Assessment Program : Brazil - IAIS Insurance Core Principles(World Bank, Washington, DC, 2012-06)This report is a full assessment of Brazil's compliance with the Insurance Core Principles (ICPs) of the International Association of Insurance Supervisors (IAIS), as adopted in October 2011. Regulation and supervision of the insurance industry in Brazil is largely the responsibility of the National Council for Private Insurance (CNSP) and the Superintendency of Private Insurance (SUSEP). The assessment is based solely on the laws, regulations, and other supervisory requirements and practices that were in place at the time of assessment. Brazil is one of the first jurisdictions to be assessed under the 2011 version of the ICPs. In the last few years the insurance industry experienced an explosive growth doubling the premium between 2005 and 2010 however, growth potential remains significant. Investments by the insurance sector are conservative and short term, primarily comprising fixed income instruments. Currently around 88 percent of the insurance business is sold by around 70 thousand active brokers, but the supervision and disclosure requirements are thin.
Users also downloaded
Showing related downloaded files
Publication The Container Port Performance Index 2023(Washington, DC: World Bank, 2024-07-18)The Container Port Performance Index (CPPI) measures the time container ships spend in port, making it an important point of reference for stakeholders in the global economy. These stakeholders include port authorities and operators, national governments, supranational organizations, development agencies, and other public and private players in trade and logistics. The index highlights where vessel time in container ports could be improved. Streamlining these processes would benefit all parties involved, including shipping lines, national governments, and consumers. This fourth edition of the CPPI relies on data from 405 container ports with at least 24 container ship port calls in the calendar year 2023. As in earlier editions of the CPPI, the ranking employs two different methodological approaches: an administrative (technical) approach and a statistical approach (using matrix factorization). Combining these two approaches ensures that the overall ranking of container ports reflects actual port performance as closely as possible while also being statistically robust. The CPPI methodology assesses the sequential steps of a container ship port call. ‘Total port hours’ refers to the total time elapsed from the moment a ship arrives at the port until the vessel leaves the berth after completing its cargo operations. The CPPI uses time as an indicator because time is very important to shipping lines, ports, and the entire logistics chain. However, time, as captured by the CPPI, is not the only way to measure port efficiency, so it does not tell the entire story of a port’s performance. Factors that can influence the time vessels spend in ports can be location-specific and under the port’s control (endogenous) or external and beyond the control of the port (exogenous). The CPPI measures time spent in container ports, strictly based on quantitative data only, which do not reveal the underlying factors or root causes of extended port times. A detailed port-specific diagnostic would be required to assess the contribution of underlying factors to the time a vessel spends in port. A very low ranking or a significant change in ranking may warrant special attention, for which the World Bank generally recommends a detailed diagnostic.Publication Global Economic Prospects, January 2025(Washington, DC: World Bank, 2025-01-16)Global growth is expected to hold steady at 2.7 percent in 2025-26. However, the global economy appears to be settling at a low growth rate that will be insufficient to foster sustained economic development—with the possibility of further headwinds from heightened policy uncertainty and adverse trade policy shifts, geopolitical tensions, persistent inflation, and climate-related natural disasters. Against this backdrop, emerging market and developing economies are set to enter the second quarter of the twenty-first century with per capita incomes on a trajectory that implies substantially slower catch-up toward advanced-economy living standards than they previously experienced. Without course corrections, most low-income countries are unlikely to graduate to middle-income status by the middle of the century. Policy action at both global and national levels is needed to foster a more favorable external environment, enhance macroeconomic stability, reduce structural constraints, address the effects of climate change, and thus accelerate long-term growth and development.Publication Digital Progress and Trends Report 2023(Washington, DC: World Bank, 2024-03-05)Digitalization is the transformational opportunity of our time. The digital sector has become a powerhouse of innovation, economic growth, and job creation. Value added in the IT services sector grew at 8 percent annually during 2000–22, nearly twice as fast as the global economy. Employment growth in IT services reached 7 percent annually, six times higher than total employment growth. The diffusion and adoption of digital technologies are just as critical as their invention. Digital uptake has accelerated since the COVID-19 pandemic, with 1.5 billion new internet users added from 2018 to 2022. The share of firms investing in digital solutions around the world has more than doubled from 2020 to 2022. Low-income countries, vulnerable populations, and small firms, however, have been falling behind, while transformative digital innovations such as artificial intelligence (AI) have been accelerating in higher-income countries. Although more than 90 percent of the population in high-income countries was online in 2022, only one in four people in low-income countries used the internet, and the speed of their connection was typically only a small fraction of that in wealthier countries. As businesses in technologically advanced countries integrate generative AI into their products and services, less than half of the businesses in many low- and middle-income countries have an internet connection. The growing digital divide is exacerbating the poverty and productivity gaps between richer and poorer economies. The Digital Progress and Trends Report series will track global digitalization progress and highlight policy trends, debates, and implications for low- and middle-income countries. The series adds to the global efforts to study the progress and trends of digitalization in two main ways: · By compiling, curating, and analyzing data from diverse sources to present a comprehensive picture of digitalization in low- and middle-income countries, including in-depth analyses on understudied topics. · By developing insights on policy opportunities, challenges, and debates and reflecting the perspectives of various stakeholders and the World Bank’s operational experiences. This report, the first in the series, aims to inform evidence-based policy making and motivate action among internal and external audiences and stakeholders. The report will bring global attention to high-performing countries that have valuable experience to share as well as to areas where efforts will need to be redoubled.Publication Business Ready 2024(Washington, DC: World Bank, 2024-10-03)Business Ready (B-READY) is a new World Bank Group corporate flagship report that evaluates the business and investment climate worldwide. It replaces and improves upon the Doing Business project. B-READY provides a comprehensive data set and description of the factors that strengthen the private sector, not only by advancing the interests of individual firms but also by elevating the interests of workers, consumers, potential new enterprises, and the natural environment. This 2024 report introduces a new analytical framework that benchmarks economies based on three pillars: Regulatory Framework, Public Services, and Operational Efficiency. The analysis centers on 10 topics essential for private sector development that correspond to various stages of the life cycle of a firm. The report also offers insights into three cross-cutting themes that are relevant for modern economies: digital adoption, environmental sustainability, and gender. B-READY draws on a robust data collection process that includes specially tailored expert questionnaires and firm-level surveys. The 2024 report, which covers 50 economies, serves as the first in a series that will expand in geographical coverage and refine its methodology over time, supporting reform advocacy, policy guidance, and further analysis and research.Publication Global Economic Prospects, June 2025(Washington, DC: World Bank, 2025-06-10)The global economy is facing another substantial headwind, emanating largely from an increase in trade tensions and heightened global policy uncertainty. For emerging market and developing economies (EMDEs), the ability to boost job creation and reduce extreme poverty has declined. Key downside risks include a further escalation of trade barriers and continued policy uncertainty. These challenges are exacerbated by subdued foreign direct investment into EMDEs. Global cooperation is needed to restore a more stable international trade environment and scale up support for vulnerable countries grappling with conflict, debt burdens, and climate change. Domestic policy action is also critical to contain inflation risks and strengthen fiscal resilience. To accelerate job creation and long-term growth, structural reforms must focus on raising institutional quality, attracting private investment, and strengthening human capital and labor markets. Countries in fragile and conflict situations face daunting development challenges that will require tailored domestic policy reforms and well-coordinated multilateral support.